To resolve the current housing crisis, a recent United Way report estimates that we need to build and repair 1.1 million housing units across the country by 2030. Adding to that challenge, there is an imperative to reduce greenhouse gas emissions and climate risks like extreme heat, flooding, and wildfires that have already cost the country over $3 billion annually. Build Canada Homes (BCH), a new federal initiative, can help to address this crisis from all sides.
To be successful, BCH must learn from the past, pull together public and private financing, and build homes that are electric, efficient, and will withstand future climate challenges.
Learning from history
In the 1940s, hundreds of thousands of homes were built from pre-approved designs to address housing shortages, known as ‘strawberry box’ homes. Those homes built in the forties, followed by the massive boom of new social housing built in the 1970s, succeeded in delivering rapid affordable housing to fill temporary gaps. While those homes met urgent needs, they were cheaply built and poorly insulated, leaving families vulnerable to high energy costs and climate impacts. Today, we have better tools.
Recently, the federal government and CMHC have developed a national housing catalogue inspired by the ‘strawberry box’ homebuilding system. New construction should utilize green construction methods, sustainable materials, and energy-efficient design. TAF recommends that all housing projects supported by BCH be built to the highest tiers of the National Model Building Code or an approved equivalent standard, such as Passive House or Toronto Green Standard Tier 2+. To make the most of our existing buildings, we must integrate deep energy retrofits to improve conditions and lower energy bills.
By prioritizing sustainable buildings, we ensure that we lock in energy affordability, while reducing the need to repair buildings over time. These are the buildings that will provide stable homes for residents well into the future.
Scale of the opportunity
It’s estimated that the 1.1 million housing units that need to be built across the country will cost $62.6 billion, and that’s assuming they’re built to lower efficiency standards. As new housing initiatives roll out, integrating air-tight building envelopes and low-carbon materials is key to long-term affordability.
Green construction and deep retrofits may come at an upfront cost, but are more cost effective over time through reduced energy bills, healthier indoor environments and, improved resilience to extreme weather events. BCH recognizes this, with $25 billion in financing and workforce development to support modern construction methods like prefabrication and 3D-printed building designs. By incentivizing harmonization in standards and approval processes among provinces and municipalities, such as rapid permitting for pre-approved repeatable designs, BCH can avoid additional costly delays from overlapping and duplicative assessments and reviews.
This investment and recognition from the federal government is essential to helping to scale these industries so that they are well-supported for future housing initiatives. It’s also promising to see that BCH will prioritize co-ops, non-profits, and Indigenous housing providers.
Several programs already support sustainable housing:
- CMHC Canada Greener Affordable Housing Retrofit Program
$1.1B in loans and grants for community housing and Indigenous governments.
- Green Municipal Fund’s Sustainable Affordable Housing Program
$300M for non-profit and municipal retrofits, active until 2026.
- Housing Accelerator Fund
$4B for municipalities and Indigenous governments, informed by leading climate organizations.
- Green and Inclusive Community Buildings Program
$2B for public building retrofits through 2029.
- Canadian Infrastructure Bank Building Retrofits Initiative
Finances retrofits for industrial, commercial, and multi-residential buildings.
- Deep Retrofit Accelerator Initiative
Supports retrofit accelerators for mid- to high-rise residential buildings.
Unlocking private capital
While the scale of public funding offered by BCH is a welcome investment, it alone won’t close the housing gap. RBC estimates a $2 trillion shortfall over five years. To reach the scale of new, affordable, and green housing needed, Canada will need to tap into private capital, too. The U.S. Low-Income Housing Tax Credit model offers a proven solution, attracting $5 in private capital for every $1 in tax incentives. Its success lies in strict affordability standards and long-term compliance.
To complement BCH, Canada is planning to bring back a tax incentive introduced in the 1970s called the Multiple Unit Rental Building (MURB) cost allowance. It permitted retail investors to claim tax deductions. As policymakers consider reviving the MURB cost allowance, they must tie incentives to sustainability, affordability, and construction quality. The units that are financed through this program should prioritize long-term resilience.
TAF recommends developing fit-for-purpose financing facilities that provide the necessary working capital for prefabricated housing. This will enable lenders to become less risk averse over time, support modern building technologies, and allow BCH to redeploy capital to other initiatives.
A systems-level approach to a generational housing crisis
Canada has a rare chance to build housing that’s not only affordable but low carbon, climate-resilient and energy-efficient. Recommendations from TAF and from the Canadian Industrialized Construction Coalition provide support for smart policy, coordinated investment, and a focus on long-term value. This will help BCH create homes that meet today’s needs and tomorrow’s challenges.
Canada’s housing and climate imperatives demand rapid, coordinated, and well-targeted investment. Achieving these goals will require blending public investment, policy, and programming to mobilize private capital at scale. This is not merely an economic or construction challenge, but a unique opportunity to improve social equity, environmental stewardship, housing affordability and creating a better outcome for future generations.
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